Friday, May 30, 2008

WASHINGTON (Reuters) - U.S. communications regulators are considering auctioning a piece of the airwaves to buyers willing to provide free broadband Internet service without pornography.Federal Communications Commission Chairman Kevin Martin is proposing to auction an unused piece of 25 megahertz wireless spectrum, with the condition that the winning bidder offer free Internet access and filter out obscene content on part of those airwaves, a spokesman for the FCC said on Thursday."We're hoping there will be increased interest in the proposal; and because this will provide wireless broadband services to more Americans, it is certainly something we want to see," said FCC spokesman Rob Kenny.Under Martin's proposal, the winner would be allowed to use the rest of the airwaves for commercial services.The plan would address criticism from some consumer advocates, who say the government has not done enough to get broadband service into more households. It also could win praise from anti-obscenity watchdog groups."I think there are a number of features of the plan that would be attractive to various constituencies," said Stifel Nicolaus analyst Blair Levin.But the plan got a lukewarm response from existing wireless carriers. The industry's chief trade group, called CTIA, said auction provisions such as the free-service requirement were too rigid."CTIA supports flexible auction rules that allow any and all entities to participate," the group said in a statement.The winning bidder also would have to build out the system to serve 50 percent of the U.S. population within four years and 95 percent within 10 years.Further details of the plan have yet to be worked out, but Martin's plan is expected to come up at the FCC's next meeting on June 12.Martin's proposal is similar to a plan put forth previously by a start-up company called M2Z. Under that plan, which was not approved by the FCC, M2Z would have been given the spectrum at no up-front cost. It would have provided free service, generating revenue partly through advertising.The 25 MHz spectrum at issue is not viewed as highly attractive to wireless carriers, unlike the 700 MHz spectrum auctioned by the FCC earlier this year. There has been little previous interest in it, aside from the M2Z proposal.

South America considers common currencyBRASILIA: South America is thinking of creating a common currency and a central bank along the lines of those in the European Union’s eurozone, Brazilian President Luiz Inacio Lula da Silva said yesterday.The idea is a logical next step following the signing last Friday of a treaty creating a Union of South American States that aims to promote joint regional customs and defense policies, Lula said during his weekly radio broadcast.“Many things still haven’t been realised. We are now going to create a Bank of South America. We are going to move forward so in the future we’ll have a single central bank, a common currency,” he said.But, he added: “This is a process. It won’t be something that happens quickly.”Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela all signed up to the Unasur treaty creating the regional union during a ceremony in Brasilia last Friday.The entity’s goal is to bring together two trade blocs within South America, Mercosur and the Andean Community, and to integrate the region.Brazil is also pushing for a regional defence council that could be used as a forum to settle inter-regional disputes as well as formulate joint policies.Lula said the creation of Unasur was “the realisation of a dream,” and evidence of remarkable economic and political progress South American nations have made in recent decades.Brazil, Latin America’s biggest economy, has taken the lead in the new entity.But Colombia, the strongest US ally in South America and a country often at odds with neighboring Venezuela and Ecuador, has decided not to join.Lula stated that “nobody can think of this as a crisis” in the nascent bloc, noting that several EU nations also opted out from aspects of European integration such as adopting the euro. - AFP

Plan Mexico Tied to SPPDana Gabriel Intel StrikeWednesday, May 28, 2008The Merida Initiative is a security aid package to Mexico and parts of Central America that was recently approved. It has been dubbed Plan Mexico and is a three year $1.4 billion “Regional Security Cooperation Initiative.” Some have described it as more of a partnership as oppose to a foreign aid package. Plan Mexico is tied to the Security and Prosperity Partnership (SPP) and the continued integration of the U.S. , Canada and Mexico into a North American Union.Much of Plan Mexico is based on the American war on drugs model, which has been costly and ineffective. This model relies primarily on military and law enforcement measures, leading to more surveillance, domestic spying, and further advancing the police state. Plan Mexico will see the transfer of equipment, technological support, and training in an effort to combat Mexico ’s growing drug trade. Some believe that this military approach will further escalate drug related violence and human rights’s abuses. There is a push for more military cooperation and the future development of a hemispheric police force that would be able to cross borders. This might not be necessary with creation of a North American Union, as our borders are being systematically erased and our sovereignty sacrificed.Plan Mexico goes well beyond trying to stop the flow of illegal drugs. At a press conference from the third SPP Leader Summit in Montebello , Quebec in August of 2007, President Bush referred to Mexico ’s drug trade as a continental problem that demanded continental solutions. Laura Carlsen, the director of the Americas Program at the U.S.-based Center for International Policy, stated that Plan Mexico is intimately linked to the SPP. She said, “It would fundamentally restructure the U.S.-Mexico binational relationship, recast economic and social problems as security issues, and militarize Mexican society. “ She went on to say, “Through the SPP, the Bush administration has sought to push its North American trade partners into a common front that would assume shared responsibility for protecting the United States from terrorist threats, promoting and protecting the free-trade economic model, and bolstering U.S. global control.”As much as half of Plan Mexico funding will go to the military, with later money allocated to law enforcement and judicial agencies. Drug cartels have managed to infiltrate the judicial system and almost every facet of Mexican law enforcement and military. There has been an undeclared border war for some time, with Mexican drug gangs and cartels vying for control. It has been reported by the mainstream media that some Mexican troops who received U.S. training have now switched sides and joined the cartels. There have also been reports of Mexican rogue military incursions across the border. The national media blackout surrounding the border violence has been lifted, as there are fears the violence could further spillover across on to the U.S. side.Some might recall Plan Colombia , which was launched by the Clinton administration back in 2000. Since its inception, it has failed to reduce the flow of illegal drugs into the U.S. and has lead to more violence and corruption. New equipment, training, and strategy was later shifted from targeting drug cartels and used against those who oppose the government. Plan Columbia later morphed into the war on terror. There were up to 800 American trainers, including Special Forces, and up to 600 private contractors in Columbia . There are fears that Plan Mexico will result in more U.S. military involvement. The Merida Initiative threatens Mexican sovereignty, will broaden presidential powers, and promote militarization of the country.The Plan Mexico strategy is part of the SPP and further integration into a North American Union. It will help in creating a fortress North America while spreading the SPP to other parts of the region. This is in an effort for the U.S. to further extend its foreign policy. There has been much speculation about possible American troop involvement, which both U.S. and Mexican authorities have adamantly denied. The U.S. is further merging its military and law enforcement with Canada and Mexico . Are we on the verge of a North American Union army? There are still many unanswered questions surrounding the U.S.-Canadian military agreement that was signed several months back.

Europe fuel protests spread widerFuel protests triggered by rising oil prices have spread to more countries across Europe, with thousands of fishermen on strike.Union leaders said Portugal's entire coastal fleet stayed in port on Friday, while in Spain, 7,000 fishermen held protests at the agriculture ministry.French fishermen have been protesting for weeks, with Belgian and Italian colleagues also involved.UK and Dutch lorry drivers held similar protests earlier this week.The strike reflects anger at the rising cost of fuel, with oil prices above $130 (83.40 euros; £65.80) a barrel.Trade unions say the cost of diesel has become prohibitively high, after rising 300% over the past five years.Wholesale fish prices, meanwhile, have been static for 20 years.Fishermen's leaders from France, Spain and Italy have been meeting in Paris to co-ordinate strikes and protests over the next three weeks in the run-up to a European Union fisheries ministers' meeting.The protesters are calling for direct immediate aid for the fisheries industry, coupled with increased subsidies.The European Commission said in a statement it was willing to show flexibility towards the industry but it has ruled out subsidies to offset rising fuel costs.Short-term aid packages were acceptable as long as they were used to address structural deficiencies in the fleets, it said.'Ruin for fishermen'Several thousand fishermen marched on the agriculture ministry in Madrid, where they handed out 20 tonnes of fresh fish to members of the public in an attempt to draw attention to their ailing industry.Please turn on JavaScript. Media requires JavaScript to play.Fishermen held protests in Brussels and MadridMany blew whistles and klaxons, and let off firecrackers producing red smoke.The BBC's Steve Kingstone at the protest said he could see flags from Catalonia, the Basque country and Galicia.One banner read: "Soaring diesel plus cheap fish equals ruin for fishermen." Another chided Prime Minister Jose Luis Rodriguez Zapatero: "You are sending us to the cemetery."We must mobilise like the French and if we have to block ports, we'll block them Xavier Aboy, union leaderOne union leader in Barcelona said the country's fishing fleet was at a standstill."Compliance is total. The entire Spanish coast is at a halt," Jose Caparros told AFP news agency.The unions also say they could blockade ports, a day after French police forcibly removed fishermen blocking oil depots."We must mobilise like the French and if we have to block ports, we'll block them," Xavier Aboy, a union leader in Galicia, told AFP.In France the authorities have offered 100m euros in aid, prompting some fishermen to return to work.At dawn on Thursday, French riot police cleared protesters from the Mediterranean oil depots of Fos-sur-Mer and Lavera, and a Total refinery at La Mede in the south.On the same day police clashed with fishermen who burned tyres in the Atlantic port of Lorient, while hundreds protested in Quimper, Brittany.On Friday, protesters blockaded the Channel port of Le Havre.Hundreds of farmers have also been blocking oil terminals near the cities of Dijon and Toulouse.In Italy, at least 5,000 fishermen are expected to strike, the main trade union Federcoopesca says. The government has already refused emergency aid to the industry.But the BBC's David Willey in Rome says many fishermen are adopting a wait-and-see policy as talks with the government continue, and in the Adriatic ports the response to the strike has been mixed."No boats went out" in Portugal, a union leader there said, and in the central port of Peniche boat owners set up a barrier to prevent unloading.Bulgarian bus drivers are also planning a one-hour strike on Friday, following protests by lorry drivers on Wednesday.

Are you ready for WW2-style energy rationing?Andrew Orlowski The Register Friday, May 30, 2008Environment Minister Hilary Benn again rebuffed calls this week for WW2-style energy rationing to return to the UK. He was responding to a Select Committee report urging ministers to issue 45 million Britons with an energy trading "credit card" - a mammoth techno-bureaucratic exercise costing several billions of pounds a year to operate.What's interesting is how the normal parliamentary business was turned upside down.Usually, it's ministers who propose batty and unworkable legislation, and fail to cost it, while select committees are supposed to scrutinize the proposals: picking apart the logic and bogus cost estimates. But in this case the select committee in question - the "Environmental Audit Committee" - is positively evangelical about a return to rationing. Perhaps not surprisingly, ministers are wary of committing electoral suicide, or at least, not in quite such an obvious fashion.Benn said his department DEFRA had made its own enquiry, which unlike the watchdog's investigation, included costs. A rationing scheme would cost between £700m and £2bn to set up, he said, and between £1bn and £2bn a year to operate he said."In essence it is ahead of its time," the minister said Tuesday. "The cost of implementing it would be quite high and there are a lot of practical problems to be overcome." Front bench Tories are equally wary.So what are the MPs proposing?The ration, or "personal carbon allowance" or PCA, is a measure of an individual's energy usage, either at home or traveling. Such usage is capped, and "further emissions rights will simply not be available," the Committee says. You may choose between a holiday, and turning on the heating. Points win prizes, however, and frugal individuals would be rewarded financially from the creation of an internal market."We could not find or imagine analogues in other fields of human activity for individual carbon trading beyond rationing during and after World War 2," the authors of the DEFRA-commissioned report "A Rough Guide to Individual Carbon Trading" wrote in 2006.The Committee, chaired by Tim Yeo MP, lauds the potential for "engagement", which will "increase awareness" of energy consumption - what the Tyndall Centre calls "carbon consciousness" - which in turn would "spearhead behavioural change". According to the MPs, "awareness is crucial if behaviours are to change."

Many Spend Rebates on Bills, Not SplurgesEarly Rebate Recipients Spend Stimulus Checks Just to Get ByBy DAVE CARPENTERThe Associated PressCHICAGOMany Americans allowed themselves to fantasize about large-screen TVs, European vacations and other luxuries when they learned of the federal rebates they'd be getting this spring and early summer.Or maybe — shh, don't tell the president — they'd pay off a credit card or set the rebate aside for a big purchase in the future, notwithstanding Washington's intentions that they pump it immediately into the flagging economy."It's not often you get a windfall like that that you can just stash away for something you need later," said Sara Jackson, 29, a graphic designer in Chattanooga, Tenn.But reality has interfered, in the form of ever-climbing food bills and $4-a-gallon gasoline. Day-to-day living costs have sopped up the checks for many other early recipients and spoiled their rebate fantasies. Government figures released Friday showed consumer spending inched up just 0.2 percent in April, despite widespread anticipation of the stimulus payments sent out starting late in the month.Based on a small but broadly diverse group of consumers who tracked their rebate spending in detail for The Associated Press, there was no mass rush to the malls for shopping sprees after the payments started showing up in bank accounts in significant numbers in May. The greater economic ramifications may not be seen for months.Vanessa Church, a 49-year-old Chicagoan with six children, was grateful for the rebate but found there wasn't much left over after big payments for utilities and other basic needs were taken care of. "Things are getting tighter and tighter," she said, adding jokingly: "I'm thinking they should do this twice a year."Brandi Dobbins, 26, and her fiance each got their $600 checks just before their May wedding on the coast of Maine. The combined amount was spent almost instantly when their caterer called and, after asking 'Are you sitting down?', informed her that due to food inflation their bill for the wedding was jumping from $46.50 per guest to $59 — virtually the entire $1,200. "In the economic grand scheme of things, I'm not quite sure that's what they intended us to spend our money on — inflation — but that's where ours went," Dobbins said.Derek Houck, an actor in North Hollywood, Calif., planned to allow himself an indulgence or two with whatever was left of his rebate after he'd taken care of necessities. It turned out to be more modest than he'd thought. When his personal finance software program showed him he had a whopping 50 cents left from the $600, he still celebrated by shelling out $49.95 for a new Wii game.———All told, 131 million households are to receive a total of $110 billion by the time the last payments are doled out in mid-July. What people do with them will help shape the direction of the sputtering economy.The last time Washington undertook such a program to combat an economic slowdown, taxpayers got rebates of $300 or $600 in the summer and early fall of 2001. The eight-month recession was over by November, but it's not clear how much the payouts helped. The amount that people actually spent — excluding saving money, investing or paying down debt — was lower than many economists expected, although estimates vary so widely an exact total is hard to peg.This year's program provides more money, aimed at delivering a bigger shot of adrenaline to the economy by inducing people to buy items they didn't otherwise have the cash for.Most individual taxpayers are getting checks of up to $600, while couples receive $1,200 plus $300 for each eligible child under 17. People earning too little to pay taxes but at least $3,000, including seniors whose only income is from Social Security, get $300 if single or $600 if a couple. And there are no payments for the wealthy: The amount starts to phase out for those with incomes over $75,000, or $150,000 for joint filers.Based on economists' preliminary assessments, and echoed by the AP sample group of more than two dozen people, Americans are not hesitating to spend the money — but more for essentials than was anticipated. It's easy to understand why: Gas prices are up more than 30 percent since the rebate check amounts were first announced and food prices are projected to increase 5 percent or more in 2008.Joseph LaVorgna, chief U.S. economist at Deutsche Bank, thinks at least half the rebate money may go toward energy costs alone."It's not going to give you the bang for the buck as originally envisioned," he said. "The odds of it having a longer-lasting impact on the economy are less. ... People were not planning to use so much of it on energy and food."Diane Swonk, chief economist for Mesirow Financial in Chicago, also estimates that consumers will spend more than half of the rebates — but much of it on the higher cost of living, citing evidence of a "very stressed consumer."That would be dramatically higher than what they signaled in an Associated Press-Ipsos poll in February, when only 19 percent of respondents said they would spend their rebates. Some 45 percent said they planned to pay off bills, 32 percent said they would save it or invest it, and 4 percent said they would donate it to charity. Consumers in the past have tended to spend significantly more than they told pollsters they thought they would.Swonk says economic growth won't be affected by where people spend it — but consumer confidence will, which can influence the longer-term outlook. Over the long haul, spending on staples won't provide the boost the government hoped for.Millions of Americans can testify to the psychological impact of a fat check, whether or not they agreed with the idea."Honestly, I think it's kind of silly that the government is paying us money when it's having such a hard time paying its own bills," said Jackson. "But shoot, who's going to turn down money when they give it to you?"———Some economists are now saying we will avert a recession, or at least a severe downturn. Don't tell that to people who have seen their living standards squeezed by the markups in supermarkets and at the pump — like Church, who's raising six children on Chicago's often hardscrabble West Side."We're definitely in a recession — I can feel it," she said over a sandwich in the cramped, bustling offices of the weekly neighborhood newspaper where she is a lifestyles and religion writer. "We get so much less for the same money. Milk and eggs and bread and vegetables and fruit are all very expensive. So the rebate was a good idea for that."Being pinched didn't prevent Church and her husband from contributing $120 of her $1,200 rebate to their church — they tithe 10 percent of everything they earn, in good times and bad.The rest went fast: $350 for a son's eighth-grade class trip to Washington, D.C., $345 for an end-of-winter balloon payment on their heating bill, $225 for a daughter's water-damaged cell phone and bill, $100 for their 15-year-old son's savings account and $60 on transit passes. Another $600 is expected later — her husband filed separately — and living costs are likely to gobble up the bulk of that, too.Church, who describes herself on a networking Web site as "a certifiable, bona fide bibliophile and the proud owner of over 5,000 books," might have liked to make a few additions to her library or spend something on herself. Not at times like this, she can't. But she's not complaining about a payment she sees as a blessing."I don't know how it affected other people's budgets overall, but it helped our money stretch," she said."I thought it was a really cool thing. It made me see my president in a different light. I was like, 'Attaboy George!' I can be swayed, I can be bought!"———The rebate couldn't have come at a more perfect time for Dobbins and her fiance: just when payments for their wedding were coming due. Every penny was devoted to the big event, which will have cost about $24,000 by the time all the bills have been settled."When I learned about the tax payment I was thrilled," said Dobbins, an account supervisor for a marketing firm in Washington, D.C. "I immediately factored that into what we would be able to pay off."The fact that the entire amount was consumed by food inflation, in the form of their caterer's price hike, was appropriately ironic given the backdrop to today's economic malaise."Do I think it accomplished what they wanted?" Dobbins said of the rebate. "No, because it's going into people's gas tanks, into their food bills or to pay off their credit cards. The cost of living is going up so fast that it's really not going into the stores. It's just keeping up with everyday costs."———The most troubling economic indicator to Houck this year has been the cash flow predictor in his Microsoft Money software, showing his finances going "down, down, down, down, down." So when the $600 rebate appeared in his bank account, it allowed the 24-year-old to splurge a little for the first time in months.Splurging is relative for an actor-for-hire doing everything from carpentry to backstage lighting work to video game bug-testing in order to pay the rent.Besides $30 on tickets to see a play a friend was in, his big "fun" purchase was the Wii game — "Super Smash Bros. Brawl." He allowed those indulgences only after spending $245 on new head shots to get his face and name out to directors, $68 to renew his subscription to an acting submission service, and most of the rest on food, gas, laundry and bills."I don't think I helped save the economy with my contributions from the rebate, but it worked well for me," said Houck.———Angela Anderson, 50, of York, Pa., thought for weeks about how she might spend her tax rebate. She could create a gas account for the increased cost of her 54-mile daily commute, pay off credit-card debt, buy a piece of local original art, put some toward a trip to Europe, and maybe use anything left over to treat herself with a massage and manicure.Alas, when the money showed up it was less than expected at $300, owing to the fact that she was unemployed for much of last year. So by the time she wrote two $250 checks to her son Michael and her daughter Jenna to support them on unpaid college internships, it was more than gone.Despite the disappointment, she was thankful."Anything I can do to set a couple of bucks aside so I can pay for the increased cost of living, I'm grateful," said Anderson, public relations director for an art school. "As a single parent, earning just a bit over $50,000, things are always tight for me."———Hung Nguyen is one of those who dreamt of a fancy new TV and got it, thanks to his payment. The 26-year-old New Orleans resident spent his $600 stimulus check the same day he received it on a 32-inch plasma television for the bargain price of $400, using the rest to pay credit-card bills.Nguyen, who works for the Federal Emergency Management Agency, lives with his parents and lost everything in Hurricane Katrina. They have since rebuilt, and he felt secure enough financially to spend the rebate on something that wasn't a necessity."I guess I kind of just spent it as it was intended for, to boost the economy," he said.For three years, he drove a car with no air-conditioning — a major sacrifice in the sticky-hot South. Now he finally feels he has a good job and can buy things he wants, not just needs.While Nguyen doesn't consider himself overly thrifty, he didn't start out intending to buy a TV. Initially, he thought he'd buy himself new glasses and pay off bills. But his brother saw the TV at a store and Nguyen thought 'Why not?' "It was worth it," he said. "The picture is awesome."———Moderately affluent Americans, too, are showing increasing signs of economic strain. Swonk says more and more households are shopping for groceries at big-box retailers rather than their local grocer, not going out to movies as often, or watching regular TV instead of rented DVDs or on-demand movies.Chuck Gutman, 40, who lives in the well-off Chicago suburb of Lincolnshire, Ill., says he feels an underlying financial security but finds himself facing tougher decisions with his money."It's a constant battle," he said of rising costs. "I like leading the good life — going to plays, concerts, restaurants — but it's harder."Gutman, who teaches English as a second language at a heavily Hispanic high school, didn't let the increasing money squeeze prevent him from spending his rebate on his passion: helping prepare students from disadvantaged communities to go to college. The $600 paid for a large portion of a summer tour of colleges where he will meet with admissions counselors who may be in a position to assist his students."I got into teaching as a vehicle to salve my desire for making a difference," he said. "Helping these students is really satisfying. Just seeing the spark in their eyes makes it worthwhile."———Gene Murray also demonstrated the high value he places on education with his family's rebate money.He came up with an interesting twist for his son's 15th birthday in May: He used the $300 dependent stipend to open a bank card account for him as a gift."I thought it was a good way to teach him how to be responsible," said Murray, 55, an instructor of information security at a technical institute outside Denver. "He can go online and look at his account balance and see his transactions."Future allowance money for Patrick also will go into the account."He's a saver," Murray said of his son. "He will get money and it will sit around six or eight months and he'll save up and get something substantial."Murray and his wife, Angie, 49, both are pursuing additional college degrees for themselves. They banked the rest of their economic stimulus check, worth $1,200, with the expectation that some will go for their tuition.He said he wasn't going out of his way to specifically spend the rebate money, but "I'm sure that it'll be useful."———For Mark and Toni Quero of Northfield, Vt., the rebates — $1,200 total — went straight into the bank, to be saved for home heating oil and replacing a picture window in their home to make it more efficient.Quero and her husband earn about $44,000 a year between his job as a maintenance man at Norwich University and her Social Security disability checks.They debated using the money for a vacation but decided instead to use it on heating oil for their three-bedroom ranch house, which they share with their 28-year-old daughter.So they're holding $1,000 for oil and $200 for the picture window replacement. The couple spent $800 on heating oil last winter, up from $600 the year before, and they expect it'll be higher this year."Mark said 'Maybe we'll take part of it and go on a nice vacation,'" said Toni Quero, 59. "Then we said 'That's silly. We'll regret it because we'll wish we'd saved it for fuel.'"———Another saver, Miami native Gani Rodriguez, 24, received her tax rebate check May 9 and immediately deposited it into her savings account. She and her boyfriend have been squirreling money away for the last year and a half to buy a house together."We're already shopping for rings," said Rodriguez, a purchasing agent at an interior design firm. "So if all goes well, we'll do it at the same time — the house and the marriage."Asked if she felt any responsibility to spend the money to help jump-start the economy, Rodriguez demurred."It's our money. I can do with it what I want," she said. "It could help to spend it, but I don't think anything big is going to change as far as (my spending for) food and gas. This is really chump change."

Some hope exercise of U.S., Canadian, Mexican reps becomes realityPosted: May 28, 200811:35 pm EasternBy Jerome R. CorsiWorldNetDailyNorth American Model ParliamentA group supporting North American integration is holding its fourth annual "North American Model Parliament" for 100 university students from the U.S., Canada and Mexico.The North American Forum on Integration, or NAFI, began is "Triumvirate" sessions Monday in Montreal's City Hall with a plan to conclude Friday.According to the NAFI website, "Triumvirate 2008" brings together the students "to participate in an international negotiation exercise in which they will simulate a parliamentary meeting between North American political actors."Participants are assigned to play one of three roles: a legislator, representing a country other than their own; a journalist; or a lobbyist.Four themes were selected as subjects of the mock parliament's debate: Fostering Renewable Electricity Markets (in English); Countering North American corporate outsourcing (in French); Western Hemisphere Travel Initiative (in English); and NAFTA's Chapter 11 on investments (in English).(Story continues below)

A major goal of the model parliament, according to the NAFI Triumvirate website, is to "develop the participants' sense of belonging to North America."WND contacted the NAFI office in Montreal requesting comment but received no reply.As WND previously reported, Raymond Chretien, the president of the Triumvirate and the former Canadian ambassador to both Mexico and the U.S., was quoted as claiming the exercise was intended to be more than academic."The creation of a North American parliament, such as the one being simulated by these young people, should be considered," Chretien told WND.Among the NAFI board of directors are Robert A. Pastor, Ph.D., former director of the Center for North American Studies at American University; and M. Stephen Blank, Ph.D., director of the North American Center for Transborder Studies at Arizona State University.Pastor has written extensively on his proposal for the creation of a "North American Community," while denying he has intended to form a North American Union modeled after the European Union."In January, Pastor resigned his position at American University's Office of International Affairs amid a reorganization. Pastor announced he was taking a one-year sabbatical in which he planned to work as co-director of The Elders, a group of 13 world figures, including Nelson Mandela, Desmond Tutu, Kofi Annan and Jimmy Carter.As WND previously reported, Pastor's 2001 book, "Toward a North American Community," presents an argument that North American integration should advance through the development of a "North American consciousness" by creating various institutions which include a North American customs union and a North American Development Fund for the economic development of Mexico.Pastor also was vice chairman of the May 2005 Council on Foreign Relations task force report, "Building a North American Community," that presents itself as a blueprint for using bureaucratic action though trilateral "working groups" constituted within the executive branches of the U.S, Mexico and Canada to advance the North American integration agenda.Stephen Blank is the driving force behind the North America Works conference.North America Works II, held in Kansas City, Mo., Dec. 1-2, 2006, was organized by the David Rockefeller-created Council of the Americas to discuss "North American Competitiveness and the Security and Prosperity Partnership of North America (SPP)."http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=50618">Critics contend the working groups are pursuing a stealth process to transform the SPP into a North American regional governmental structure.WND reported last year's Triumvirate 2007 was held in Washington, D.C.The Triumvirate 2006 North American Model Parliament was held in the Mexican Senate, and Triumvirate 2005, the first model parliament, took place in Ottawa, Canada.The Western Hemisphere Travel Initiative emerged from the Intelligence Reform and Terrorism Prevention Act of 2004, which requires all travelers to present a passport or other equivalent documents denoting identity and citizenship when entering the U.S. from Canada, Mexico, Bermuda and the Caribbean.NAFTA Chapter 11 establishes an international tribunal to resolve disputes in which NAFTA investors claim national, state or local laws in the U.S., Canada or Mexico adversely impact NAFTA investments.NAFTA Chapter 11 tribunals are empowered under NAFTA to overturn U.S. federal, state or local laws or ordinances that are judged to have harmed the interests of investors under NAFTA.A Canadian government website lists Chapter 11 arbitrations involving Canadian companies and investors.The U.S. State Department website lists on a sidebar all current NAFTA Chapter 11 investor-state arbitrations.

I’m betting that, by the end of 2008, Americans will have adjusted to gasoline that costs $4 or more per gallon. We won’t like it, but we will accept it as the price one pays to live in a world that is filled with oil, but one where it resides mostly in nations unfriendly to our welfare and ambitions, as well as in difficult places such as the ocean depths.Europe which has no such oil reserves save those in the North Sea off of England has long since paid large sums of money for the gasoline it requires, importing much of it from Russia, a nation that oil and natural gas has helped sustain through seventy years of horrid history under Soviet communist domination and now in the new version of czarist control by Vladimir Putin and his friends.Russia, like so many other oil-rich nations, however, has demonstrated that political control of oil is a recipe for mismanagement and corruption. Ironically, it is the Saudis and the Gulf states that have invested more wisely in their vast oil and natural gas industries, planning ahead to transform themselves into financial centers and even tourist destinations. The African oil nations remain despotisms wracked with internal mutinies and factions. In South America, it runs the gamut from Venezuala's declining capabilities to Brazil's massive new discoveries.Meanwhile, Americans are finally coming to the realization that they have permitted those who prefer to keep Alaska and our offshore areas “pristine” bastions devoted to creatures such as caribou, polar bears, and loons that could care less whether we are forced to pay exorbitant amounts of money to fuel our cars, keep our trucks on the road, and heat our homes.These same folks, environmentalists and those who hate America’s success, have no problem proposing that massive wind “farms” be erected in those same offshore areas where one can watch them try to generate a mere pittance worth of electricity if only the wind will keep blowing. It doesn’t keep blowing all the time no matter where these monstrosities are located. Wind power is one of the most idiotic forms of energy and exists only because of massive subsidies and government mandates. They must be backed up by those wonderful old-fashioned coal-fired plants or, God willing, by the construction of more nuclear ones.In the May issue of Energy Tribune, editors Michael J. Economides and Robert Bryce devote its pages to Alaska and other places around the world that are going to be more and more in the news as the price of oil and natural gas continues to rise. This is because investors, watching the value of the U.S. dollar decline, are putting their money into commodities futures. In an article by Ron Oligney, the author recalls that, “Almost as soon as the Trans-Alaskan Pipeline System construction was complete and oil began to flow in 1977, the talk around our dinner table and across Alaska turned to the next great pipeline project—the Trans-Alaskan Gasline System.” Today, thirty years later, it has not been built.I suspect that Alaska is going to emerge as a major political issue in the months and years ahead. Unfortunately for the voters, all three candidates have drunk deeply of the environmental Kool-Aid and the two Democrats have voiced deep antipathy to the only thing that will provide any measure of national energy security, Big Oil. It costs billions to drill for oil, to transport it via pipelines, to refine it, and to make it available to people who need to drive to work.Americans need Big Oil's enterprise and their investor dividends, but Congress insists on thwarting every effort they must make, every dollar they must risk, and every job they provide, by making them the enemy. If you want to see what a real enemy looks like head south and take a look at Venezuela's Hugo Chavez.Congress, seeking to divert attention from its decades-long, appallingly stupid energy policies, prefers to drag Big Oil's executives before its committees, demanding that they abandon the capitalist notion of making a profit and, in the case of Rep. Maxine Waters, threatening to nationalize them. This is what communists and others do.As Robert Bryce says, “America has never quite known what to do with Alaska. For many, the state—far from the lower 48, cold, and largely unpopulated—is more a notion than a place. That may help explain why oil and gas development in Alaska carries so much political baggage."The Bush administration has just declared the polar bear, currently a thriving population, as “threatened” under the Endangered Species Act, claiming that a computer model of global warming in fifty to a hundred years will be bad for them. This ignores the cooling cycle the Earth has been in since 1998. This puts Alaska's oil and gas reserves in its vast offshore areas off-limits to any exploration and extraction.Billions of barrels exist beneath the Alaska National Wildlife Refuge and offshore. Americans are going to want to get at it. They are going to become more and more vocal about it as the price of gasoline increases and they will be years away from getting any once the drilling begins.Alaska is preparing to sue the U.S. government for depriving Americans of the riches Congress refuses to access in as little as 2,000 acres of the Refuges’ 19.5 million acres.Meanwhile, in the rest of the world, in places like India and China, the demand for oil is growing as their economies grow. China cannot build coal-fired electricity generation plants fast enough to keep pace with its billion-plus population and India is planning an ambitious program of nuclear plants for its billion-plus population.In the United States, we make it as difficult as possible to build a single new plant.It’s a new era of prosperity and America, so accustomed to being the wealthiest place on Earth, is going to have to make some changes—and soon—if it wants to be a player. It needs to scrap its idiotic ethanol program. It needs to open up its offshore areas to exploration and extraction. It needs to drill in ANWR.There is a price to pay for being stupid. We are all going to pay it until Congress and whoever occupies the White House next January begins to listen to the rest of us.

Speaking of major exchanges, keep an eye on Vietnam. First and foremost, the Ho Chi Minh stock index is neck deep in a nasty bear market:Investors were gaga for the VNI last year… Vietnam’s genuine growth prospects pushed the index up over 23%. This year, Vietnam has been slammed with double-digit inflation and a hard-core credit crisis… thus, the VNI has plunged 55% year to date.And today, we learn Vietnamese officials have halted trading for the third straight day. The State Securities Commission says a computer glitch has crippled trading capabilities and hopes to resume trading by the end of the week. We couldn’t help but notice the VNI had been free-falling into the abyss leading up to the convenient stoppage… the index was down over 20% in May alone.Over-the-counter trading in Hanoi has stayed online, and has been trending down all week. When the Ho Chi Minh exchange officials turn the power back on, we wouldn’t be surprised to see some serious fireworks.Elsewhere in the world, Brazil is in the final stages of creating a sovereign wealth fund. The bill to enact a Brazilian SWF heads to the nation’s congress today. When approved, the bill’s sponsors estimate the fund will control $10-20 billion, almost all of which will be invested abroad.Brazil was able to create this new SWF after the Brazilian government produced an annual surplus… 4% of Brazil’s GDP. Must be nice.Check out this chart from today’s Wall Street Journal:Pretty interesting depiction of just how quickly Wall Street lost faith in Bear Stearns. Like every other big financial brokerage house, Bear’s day-to-day operations were financed by short-term loans backed by little more than their illustrious reputation. The credit default swap market, as illustrated above, bets on the probability of those loans going bad. You can see the slow but steady realization that Bear was overextended and undercapitalized… lending money to this fiscal nightmare became an undesirable proposition, to say the least.When we see this chart, we think of the U.S. at large. What an appropriate allegory, no? As the U.S. -- from small-town consumers to Washington bureaucrats -- digs itself deeper in the hole, when will the risk to support our consumerism outweigh the benefits? When it finally does, will it all unravel this quickly? We saw what happened to Bear Stearns when its creditors turned the corner…

Friday, May 30, 2008 - FreeMarketNews.comUS banks set aside a record $37.1bn to cover losses on real estate loans and other credits during the first quarter in a sign of the growing economic pain being caused by the global credit crisis, regulators said on Thursday.Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, said it was likely loan-loss provisions and bank failures would rise in coming quarters as the fallout from market turmoil hits the real economy.“While we may be past the worst of the turmoil in financial markets, we’re still in the early stages of the traditional credit crisis you typically see during an economic downturn,” she said, adding: “What we really need to focus on is the uncertainty surrounding the economy . . . and again it is all about housing.”

Although it is prudent to be skeptical about the entries found at Wikipedia, the on line encyclopedia offers a sound account of utopias: “Utopia is a term for an ideal society. It has been used to describe both intentional communities that attempted to create an ideal society, and fictional societies portrayed in literature. The term is sometimes used pejoratively, in reference to an unrealistic ideal that is impossible to achieve....” At a recent conference I directed for Freedom Communications, Inc., the criticism that libertarianism is utopian took center stage. It was advanced by a respectful critic, one who was not disdainful but merely doubtful about the soundness of libertarianism as a viable approach to thinking about public affairs. The gist of the doubtful thesis amounted to the claim that libertarianism is altogether too negative about government, indeed, that libertarians tend to hate politics and all that’s associated with it. I found myself inspired to reflect upon the critic’s charge, especially since just a few weeks ago I penned a column contending that contemporary politics has become thoroughly corrupt. It is now virtually routine for politicians to be panderers, people who seek to be elected to public office on the basis of offering voters benefits that they will deliver at the expense of others. For virtually every politician the first principle seems to be to promote wealth redistribution, taking from Peter and handing some of what was taken to Paul, while keeping a good bit for politicians and their employees, bureaucrats. Is this evidence supporting the claim that libertarians hate politicians, consider government all bad? Not quite. When one considers an institution or profession as having been corrupted, it is generally understood that there could be instances of it that are not corrupted. Corruption means having gone bad, having seriously deteriorated from the proper, legitimate sort. Like a bad apple or rotten tomato, corrupt politics assume that there could be a right sort of the thing. Libertarianism is a political stance that is well sketched out in the Declaration of Independence, a document that the American Founders--mainly Thomas Jefferson--crafted and signed on July 4, 1776. Seeing that the anniversary of this date is the most significant American holiday being celebrated every year in America, and that’s about to happen this year, it may be useful to quote the few lines that lay out the conception it proposes as to the nature of a proper government: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed....”The libertarian view of government is that this institution has as its purpose to secure the unalienable rights of the citizenry that’s to be served by the government via certain just powers. Government, in turn, becomes corrupt when this purpose is abandoned and others take its place. Politicians, who are supposed to run for offices that contribute to the proper purpose of government, become corrupt when they run for offices that do not contribute to this proper purpose but to others, including coercive wealth redistribution, coercive micromanagement of the lives of the citizenry, coercive regulation of commerce, science, health care and many other aspects of the lives of the citizenry.Admittedly, this conception of government is not what has been most prominent throughout human history and, indeed, across the globe in our own time. Even in America, where the Declaration was penned and was supposed to guide the drafting of the constitution of the federal government (and even, in time, state governments), the idea is revolutionary. But that isn’t what is vital in this discussion. What is vital is that for those who see the view sketched in the Declaration as sound, as do most libertarians, government can be understood in positive, benign terms and need by no means be “hated.” Only when governments become corrupted do they become objects of derision, even hatred, mainly because their powers are then utilized for unjust purposes, which is a grave dereliction of their duty.Think of it like this: Medicine is a wonderful, positive profession but when medical professionals abandon their purpose and utilize their skills--powers--to perpetrate quackery, they have become corrupt and are deserving of criticism, even sanction. That is just what the libertarian thinks about most governments, now or in the past. But the libertarian isn’t deluded into thinking that even the best possible government will be a road to the solution of all social, let alone, personal problems people face in a country. Now that’s utopianism.

It is becoming increasingly likely that soon the United States of America, which supposedly won the Cold War against the socialist Soviet Union, will become a socialist society. A comparable country would be France, prior to the presidency of Szarkozy. This is the conclusion to be drawn from what two of the presidential candidates who have a solid prospect to reach the White House have been saying over the last several months. Both, Senators Hillary Rodham Clinton and Barack Hussein Obama have indicated in no uncertain terms that they prefer an economic order in the United States that is regimented by the plans of some folks from above, not by the free choices of individuals from below. She has said that what America needs is “a commander in chief of the economy.” He has decried American capitalism and the profit motive that is its main economic engine. She has taken advice from neo-Marxists Michael Lerner of TIKKUN magazine, he has stated that the greatest influence on his thinking and values was his mother, an avowed socialist and communist sympathizer.I am not using “socialist” and “communist” as scare terms, only as accurate descriptions of what the two potential nominees of the Democratic Party believe. They are not simply welfare statists, people who believe that along with a substantial free market the country needs to have supportive federal and state governments who provide people with last ditch economic security in the face of the vicissitudes of market forces. No, the two candidates appear to be impatient with such meager measures and want to take the reigns once they enter the White House and shape the country’s economic affairs according to a specific vision. They both believe in the planned economy (with just a bit of hesitation from Senator Obama who has indicated in a few of his speeches and interviews some skepticism about extensive government regulation).Why are these people champions of socialism? Because, it seems, they believe that economic affairs in a society ought to be completely predictable and risk free. Only a system that guarantees success for everyone--never mind whether his or her work is in demand, whether luck is on his or her side, whether he or she is skilled and talented--would satisfy the criterion of a just socio-economic order for these candidates. And if the spontaneous processes of the free market fail to achieve this goal, then government must enter to regiment the country so that things turn out properly, as envisioned by those seeking such a system of guarantees.This is what is called utopianism in the field of political economy. Most people know that it is an impossible dream, an ideal that can only be achieve in fantasy, not in reality. The world simply doesn’t work in a way that can provide everyone with economic and related success. To wish for this is comparable to wishing for a marathon race that everyone will win! Impossible. (George Orwell’s Animal Farm shows this nicely!) And to attempt it must then involve massive coercive force. That is just what happened in socialist bloc and why their system failed and left the countries where it was attempted a colossal economic mess form which recovery will take decades.Unfortunately over the last several decades most Americans have been taught by teachers who pretty much share the two Senators’ economic philosophy. In elementary school students are indoctrinated about all kinds of topics, from sex to the environment, and how government must deal with problems therein. The idea of individual freedom is, turn, nearly completely neglected. In high schools there is very little economic literacy being taught and most students are educated to care about fairness and equality, not about initiative and risk. In colleges and universities there is now very little in the curriculum that reminds students of the most productive but also unsure economic system, namely, capitalism. Instead the dream world of the top down managed economic system is most widely championed.In the American political arena there is hardly anyone who opposes these trends. Certainly the Republicans cannot be counted on to challenge the socialist vision since in the main they have their own similar moral authoritarian vision to offer. The ideas and ideals of the Founders are nearly cast to the side by all but the small group of libertarians who aren’t at this time a viable political alternative.Maybe this is a temporary setback. I believe in the long run the free market alternative is going to be triumphant. But for the time being it is losing. So we need to prepare for some pretty awful times.

Last Updated: 12:38am BST 30/05/2008The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase.The cost of insuring against default on the bonds of Lehman Brothers, Merrill Lynch and other big banks and brokerages has surged over the last two weeks, threatening to reach the stress levels seen before the Bear Stearns debacle. Spreads on inter-bank Libor and Euribor rates in Europe are back near record levels.Credit default swaps (CDS) on Lehman debt have risen from around 130 in late April to 247, while Merrill debt has spiked to 196. Most analysts had thought the coast was clear for such broker dealers after the US Federal Reserve invoked an emergency clause in March to let them borrow directly from its lending window.

But there are now concerns that the Fed itself may be exhausting its $800bn (£399bn) stock of assets. It has swapped almost $300bn of 10-year Treasuries for questionable mortgage debt, and provided Term Auction Credit of $130bn."The steep rise in swap spreads this week is ominous," said John Hussman, head of the Hussman Funds. "The deterioration is in stark contrast to what investors have come to hope since March."Lehman Brothers took writedowns of just $200m on its $6.5bn portfolio of sub-prime debt in the first quarter even though a quarter of the securities had "junk" ratings, typically worth a fraction of face value.Willem Sels, a credit analyst at Dresdner Kleinwort, said the banks are beginning to face waves of defaults on credit cards, car loans, and now corporate loans. "We believe we're entering Phase II. The liquidity crisis has eased a little, but the real credit losses are accelerating. The worst is yet to come," he said.The jump in corporate bankruptcies has not yet been picked up by the usual indicators, which tend to lag the market, lulling investors into a false sense of security. The true losses are already known to specialists in the business, said Mr Sels.

The only thing really feared by the rest of the world is that the economic collapse of the US, now sliding into deepening recession, will have drastic effects on their own economies. This is the driving power behind these recent world summits (none of which included the U.S. - Ed). Only closer economic relations between these other nations can lessen the effects of the world-wide effects of the coming US economic depression and financial collapse. - Bill Buckler, the-privateer.com, 24 May 2008

Indonesia announced this week it will be leaving OPEC. We doubt consumers will give a hoot about this nugget. But it’s still interesting to your editors.Indonesian officials said that the country’s demand for crude matched with dwindling national output leaves it no choice but to leave the oil cartel. In fact, Indonesia probably no longer qualifies for the club. Most gauges suggest the country is a net importer of crude.“If you were Indonesia,” asks our colleague Martin Hutchinson in this morning’s issue of Money Morning, “which countries would you rather have as your buddies? A bunch of sleazy, corrupt, idle ‘lottery winners’ such as Nigeria, Venezuela and Angola? Or would you prefer a set of hardworking and diligent neighbors such as Singapore, Malaysia and Thailand? Not to mention two of the largest-growth economies in the world: India and China?“Believe me, when Indonesia left OPEC, it wasn't to save the paltry $3 million annual dues. Like Groucho Marx, Indonesia decided it didn't want to be a member of a club that had such low standards for membership.”

The United States is the only major country on the planet that taxes citizens on their worldwide income, no matter where those citizens happen to live.It's not like that everywhere else. If you were born in England, Ireland, Japan, or almost any other country, all you need to do to avoid the obligation to pay tax on your worldwide income is leave. The same is true if you move somewhere else. Want to stop paying taxes? You move again. Then after an extended period - normally one year or longer - you no longer have any obligation to pay taxes on your income outside that country (although you may continue to be subject to gift and estate taxes).But not the USA. To permanently disconnect from U.S. tax obligations, a U.S. citizen must not only leave the United States, but also take the radical step of giving up U.S. citizenship. This process (from a U.S. standpoint) is called expatriation.Expats Say: "R.I.P. Estate Taxes!"The income tax savings from expatriation can be huge. But for truly wealthy U.S. citizens, the biggest savings from expatriation come after they die.In fact, the tax savings makes a wealthy U.S. expat as fortunate as wealthy foreigners when it comes to estate taxes. Let me explain. Let's say an Irish citizen died this year after she relocated to Italy two years ago. She was living outside Ireland at the time of her death, so her US$1 billion estate pays zero gift and estate tax for all bequests outside of Ireland.Now let's say a U.S. person died with a US$1 billion estate this year, after he relocated to Hong Kong back in 2000. Even though this wealthy businessman lived and died outside the U.S., his estate would still have to pay a maximum combined gift and estate tax burden exceeding US$450 million.The arithmetic is almost as compelling for smaller estates. An entrepreneur with a US$20 million estate could save over US$8 million in estate and gift taxes by giving up U.S. citizenship.However, the image of wealthy former U.S. citizens living tax-free in tropical paradises is an irresistible populist target. The result has been a series of increasingly stringent laws that penalize U.S. citizens who give up their U.S. citizenship with "tax avoidance" as a principal purpose.Leave the USA, Pay an "Exit Tax"Congress has now once again amended these "anti-expatriation" provisions in a new bill. Both houses approved the bill unanimously, and sent it to President Bush for his signature.The primary purpose of the Heroes Earnings Assistance and Relief Tax Act of 2008 is to provide a range of tax breaks for veterans. But the law also imposes the first-ever "exit tax" on even moderately wealthy expatriates. I predicted Congress could pass an exit tax bill like this over a year ago, and now it has.Once President Bush signs this bill, the law will require future expatriates to pay a tax on all unrealized gains of their worldwide estate, including most offshore trusts. And the tax applies not only to former U.S. citizens, but also to long-term green card holders who have resided in the United States for at least eight of the 15 years before they expatriate. (Fortunately, long-term residents can "opt out" of the exit tax, as I'll explain in a moment.)How are you supposed to pay the tax without selling your assets? That's your problem - not the IRS's - although the bill permits deferral in certain circumstances.You Don't Need to be "Rich" to Pay the Exit TaxIt would be one thing if the exit tax only affected billionaires. But, with only a few exceptions for dual nationals and others with strong ties to another country, the law applies to any expatriate that:1. Has an average annual net income tax liability that exceeds US$139,000, adjusted annually for inflation for the five preceding years ending before the date you lose your U.S. citizenship or terminate your residency2. Has a net worth of US$2 million or more on such date3. Fails to certify under penalty of perjury that he or she has complied with all U.S. federal tax obligations for the preceding five years or fails to submit any proof of compliance the IRS demandsIf you qualify under any of these criteria, you may be subject to the exit tax. The good news - if there is any - is that the first US$600,000 of gains is excluded. This exclusion doubles to US$1.2 million for a married couple filing jointly, when both expatriate. This exclusion will increase by a cost of living adjustment factor after 2008.Gains will be calculated "mark-to-market," or the difference between the market value on the expatriation date and the market value at acquisition. Expatriates who were not born in the United States may elect to value their property at its fair market value on the date they first became a U.S.resident, rather than when they first acquired it.This phantom gain will presumably be taxed as ordinary income (at rates as high as 35%) or capital gains (at either a 15%, 25%, or 28% rate), as provided under current law. When you actually sell the assets, you won't have to pay any additional taxes. However, your adopted country might tax the gain a second time, leading to double taxation on the same income.Your Retirement Plan Takes a 51% HaircutAnd now for the really bad news: Once you expatriate, you'll pay up to a 51% tax on distributions from retirement plans. The same goes for most other forms of deferred payments. If there's a silver lining, it's that the tax isn't due until you actually receive payments from the plan.Plans covered by this provision include:Qualified pension, profit sharing and stock bonus plansQualified annuity plansFederal pension plansSimplified employee pension plansSimplified retirement accountsThe IRS imposes this extra 51% tax on these plans in two steps. First of all, the entity that makes the payment (like your pension fund) must withhold a 30% tax from any distributions to a "covered expatriate." That entity must also withhold a second 30% tax for payments to a "non-resident alien individual." Applying these two taxes sequentially equals a 51% net tax.Similar rules (but with some added complexities) apply for distributions from non-grantor trusts. These are trusts where the expatriate isn't even treated as the trust's owner under the grantor trust rules.Your individual retirement account is NOT eligible for this treatment. If you're a "covered expatriate," you must pay income tax on the entire value of the plan, as if you received it in a lump sum. (Fortunately, no "early distribution" tax applies if you're under age 59 1/2.)Don't Make a Gift or Bequest to the United States!You'd think the United States would encourage wealthy foreigners to make payments to persons in the United States. After all, any beneficiaries in the U.S. would presumably spend that money on U.S. goods and services.But if you're a covered expatriate, and you make a gift or bequest to a U.S. person 10, 15, or even 50 years after your expatriation, the recipient must withhold tax at the highest marginal gift or estate tax rate that applies. Exactly how much tax you pay depends on the amount of gift or estate tax paid to a foreign country with respect to that gift or bequest.I suspect this provision will be impossible to enforce years after-the-fact. Many recipients won't even be aware that they're obligated to pay the tax. Time will tell!How to Avoid the Exit Tax if You Were Born in the U.S.If your net worth is only a little over US$2 million (US$4 million for a married couple expatriating at the same time), the most obvious way to avoid the exit tax is to spend enough money to get your net worth under these thresholds.Take a trip around the world. Blow some money in Las Vegas. Throw a really big party.You can also contribute your excess funds to a qualified charity, or give away up to US$1 million over your lifetime to anyone else without triggering a gift tax liability. If you've paid more than an average of US$139,000 annually for the previous five years, however, this strategy won't work. And if you don't have sufficient cash to pay the exit tax, your best option may be to elect to defer payment. You'll pay interest for the period tax is deferred, and you may be required to post a bond with the Treasury Department.Fortunately, you can make this election (which is irrevocable) on a property-by-property basis. For instance, it appears as if you could pay the exit tax on all assets outside your IRA, and defer it for the assets in the IRA.More Ways to Avoid this Tax, If You're Just a U.S. ResidentIf you weren't born in the United States, you have a couple of additional options.If you were born with citizenship both in the United States and another country, you may not be subject to the exit tax. To qualify for this exemption, when you expatriate, you must also be a citizen of another country (and taxed by another country), and not been a U.S. resident for more than 10 years during the 15-year period prior to your expatriation.If you're a green card holder, you can opt out of the exit tax. To do so, you must become resident for tax purposes in a foreign country that has a tax treaty with the United States. You must also inform the IRS of your intention not to waive the benefits of the tax treaty applicable to that country.The bottom line: with the exit tax, Congress has made the most significant change to the anti-expatriation rules since their inception in 1966.In doing so, the IRS has sent wealthy U.S. citizens and long-term residents a clear message: You're slaves on our plantation. And if you want to exercise your right to leave, you'll pay dearly for the privilege.Is expatriation for you? The decision to give up U.S. citizenship is a serious one. It requires that you obtain a passport from another country, leave the United States permanently, and set up residence in a suitable jurisdiction.It's a step you should take only after consulting with your family and professional advisors. But it's the only way that U.S. citizens and long-term residents can eliminate U.S. tax liability on their non-U.S. income, wherever they live. And it's a tax avoidance option that Congress has now made much more difficult.

Monday, May 26, 2008

Did All Those Sacrifices Mean Anything?Way back when I was a student, my classmates and I stood together at the start of each school day and repeated the Lord's Prayer, then pledged allegiance to the American flag. In those days, before judges ended school prayer and limited flag pledges, millions of young Americans started the school day in the same way.Think about the American flag — 13 stripes and 50 stars, standing as it does as the nation's essential patriotic symbol.What Patriotism Really MeansThe old saw is that "patriotism is the last refuge of scoundrels." It's true that far too many have used appeals to patriotism, (or nationalism), to cover their nefarious schemes for power.But on this American Memorial Day we should consider that true patriotism denotes positive, supportive attitudes toward one's country. Patriotism includes pride in one's country and its achievements, in its culture and also identification with other people in the nation. Patriotism implies that the country, however defined, offers moral standards and values — what it means to be "an American." Patriotism also implies that individuals should place their nation's interests above their personal or group interests. Indeed, in time of war, the ultimate sacrifice may extend to offering your own life on behalf of your country.Remembering the Sacrifice Made in BloodMemorial Day is a day when Americans should pause and focus on the ultimate price so many have paid over the centuries to win and preserve our freedom.Each generation has taken up and continued the struggle to protect liberty. My father fought in France in 1918 and my older brother flew missions in a B-24 Liberator over Italy in 1944. Both have passed on now. Perhaps your family history is similar.Young folks used to have a saying: "To die for." It meant that some object or person is so enticing that you're willing to make the ultimate sacrifice to obtain it.But ask yourself this, how many Americans today would be willing to die for the freedoms and liberties we supposedly enjoy — as more than a million before us have done? And do we still enjoy the liberties for which they fought and died? Or have freedoms been slowly taken from us, devaluing the sacrifice of their deaths? Did they die in vain? In his eloquent Gettysburg Address, President Abraham Lincoln suggested that what we do as a people would determine the answer to that question.Painting Politics by NumbersAmericans are overwhelmed by numbers. We're surrounded by presidential preference polls, a bloated national debt, huge budget and trade deficits, highway fatalities, the number of forecasted hurricanes, crime statistics. But too many people seem more concerned about the latest American Idol winner than about how our freedoms are being systematically stolen away.The cruelest numbers of all are those that seem so senseless.Over 4,000 members of the American military have died in the Iraq war, as well as thousands more Iraqis and non-military American contractors. Whatever the merits of this war, each American and Iraqi casualty, many of them very young, were unique individuals. Each with his or her own life, loves and potential that now will go unrealized. Was this really necessary? It's worth considering in comparison that in all the wars America has fought, including our own Civil War; 1,290,200 have died. During Gen. Robert E. Lee's first Confederate invasion of the North, at Antietam in my home state of Maryland, on Sept. 17, 1862 alone, more than 23,000 men were killed, wounded or missing.What's Worth Dying For?At Sound Of Cannons, we often speak of freedom and liberty, usually in terms of very real threats to both of these precious commodities.To observe that so many have died in the American cause over so many centuries only accentuates the meaning and importance of the cause for which they gave their "last full measure of devotion" as Lincoln said. They died before their time, with promises unrealized, in the service of their country. Their very real sacrifice for our liberties makes it all the more important that we guard against diminution of those liberties in our own time — whether the threat is from abroad, or from within our own government.Today let's remember the real meaning of Memorial Day and never forget those who made the ultimate sacrifice for our liberties.

Given the price of gas and air baggage fees, for the first time since 2002, fewer Americans plan to travel over Memorial Day weekend than the year before. Twelve percent of the U.S. population, says AAA, will travel this weekend, down 1% from last year.Gas prices are up 19% since Memorial Day 2007. The average car rental is up 45%, average airfare up 8% and typical economy hotel room up 9%.

Jamie Dimon: The Worst is Ahead for BanksTuesday, May 20, 2008 2:03 PMJPMorgan Chase CEO James Dimon says banks will suffer more from the recession than from the subprime debacle itself.Investment banks have written down tens of billions of dollar so far, but the worst is not behind us yet, Dimon says. Banks will be hit harder as the recession unfolds."The recession is just starting,” Dimon told an audience at the UBS AG financial services conference in New York."We don't know whether it's going to be mild or severe. It could be deep, it could be worse than the capital markets crisis."Dimon also believes that there is "a third of a chance” that the recession is "going to be pretty bad.”The recession could "come closer to a 1982 recession than the very mild recession we had in 2001 and 1990,” Dimon said.Credit quality is also declining much faster than experts had previously estimated, and it is going beyond the portfolios of consumers, Dimon said.Another negative sign is that the volume of credit card charges is dipping, he said.The recession thus is causing the "round two financial effect" of banking industry turbulence, Dimon said."Commercial bank losses are growing — you see it in home equity, you see it in other mortgage products, you see it in small business, you see it in wholesale business,” he said."They are not getting terrible, but they are getting worse."The effect of the recession could last for quite awhile, farther into the future than experts have forecast, he said.With credit standards getting tighter and reserves for loan losses increasing, companies will be forced to deleverage their balance sheets, resulting in "weaker” capital, Dimon said."This could take into '09 and '10," Dimon said.Dimon’s sentiment echo those of billionaire investor George Soros.Wall Street is emerging from the credit wreckage, but Main Street — the economy that ordinary people have to live with — is headed downhill fast, Soros told listeners at a recent Council on Foreign Relations event."I think we have the acute phase of the financial crisis largely behind us,” Soros says."But the damage that has been done to the system has to affect the real economy. The effect of that is only beginning to be felt.”

Losing a Mint:Curb on Coin Sales; Angers CollectorsU.S. Begins Rationing Popular 'Silver Eagles'; How $1 Fetches $19By Ianthe Jeanne DuganThe Wall Street JournalFriday, May 23, 2008The government rationed food during World War II and gasoline in the 1970s. Now it's imposing quotas on another precious commodity: 2008 dollar coins known as silver eagles.The coins, each containing about an ounce of silver, have become so popular among investors seeking alternatives to stocks and real estate that the U.S. Mint can't make them fast enough. In March the mint stopped taking orders for the bullion coins. Late last month it began limiting how many coins its 13 authorized buyers worldwide are allowed to purchase."This came out of nowhere," says Mark Oliari, owner of Coins 'N Things Inc. in Bridgewater, Mass., one of the biggest buyers of silver eagles. With customers demanding twice as many as they did last year, Mr. Oliari would like to buy 500,000 a week. But the mint will sell him only around 100,000.The coins have a face value of $1. But the mint sells them for the going price of silver, plus a small premium, to a handful of wholesalers, brokerage companies, precious-metals firms, coin dealers, and banks. The dealers mark the coins up a bit more and sell them to the public. Currently, the coins are fetching about $19 apiece, with some sellers seeking more than $20.For Coins 'N Things alone, the shortage is costing hundreds of thousands of dollars in lost sales of silver eagles. The firm sells about $1 billion worth of precious metal every year, including silver, gold, and platinum coins. Mr. Oliari, a 50-year-old numismatist who has been in the business since 1973, sniffs: "You can't print what I want to say about the mint."The mint, a bureau of the U.S. Treasury, has offered little explanation beyond a memo last month to its dealers. "The unprecedented demand for American Eagle Silver Bullion Coins necessitates our allocating these coins on a weekly basis until we are able to meet demand," the mint wrote. A spokesman declined to elaborate.... 'Poor Man's Gold'The rare shortage offers a glimpse into the growing love of a commodity known as "poor man's gold." With more silver mined than gold traditionally, silver has always been far cheaper than gold and today has less than 2% of gold's value.But silver is growing in popularity, and some investors are betting that its value will surge as inventory shrinks. Big investors are loading up on silver eagles, which are the only American silver coins allowed in individual retirement plans. For small investors, they are an accessible way to get into the metal boom."Unlike gold, these coins can be bought by regular citizens," says J.R. Roland, a Brownsville, Tenn., judge who recently began buying the coins -- and trading them on eBay. "In these economic hard times, silver coins are a great way to invest."In March, sales of silver eagles surged more than ninefold from the previous month, to 1.85 million. This year, the mint has sold 6.8 million, representing more than twice last year's pace. Still, numismatists are clamoring for millions more as the price of silver soars. It has more than doubled in the past three years and now trades at around $17 a troy ounce, which is slightly heavier than a traditional ounce.Linda Wood, a 57-year-old Pittsburgh accountant, scours eBay, coin shops, and flea markets in search of silver eagles. One by one, she has accumulated about 300 in the past few months and stores them in a bank safe-deposit box.Traditional coin collectors may be impressed with the government's written description of silver eagles as "one of the most beautiful coins ever minted." But Ms. Wood isn't in it for aesthetics. She became a silver bug after she and her husband saw the value of their individual retirement accounts decline by $2,500 -- a "significant" chunk. "I just need bullion," she says. "I wouldn't care if the coins were ugly."Amid the mint caps, shady silver-eagle hawkers are thriving. Some coins are priced at $25 and higher. Mr. Roland says that he had to wait a month after ordering some on eBay recently, because the sellers didn't even have the goods. "I can't wait long, because you never know what's going to happen with the price," he says.In Manitowoc, Wis., Dan Zirk, owner of Manitowoc Card & Coin, has sold twice as many silver eagles as he did last year. So he has stashed away his remaining handful of 2008 coins, betting the price will rise. "I want $22 apiece," says Mr. Zirk. He says customers, meanwhile, are asking for earlier years and other forms of silver.... Lady LibertyThe government began producing silver eagles in 1986, basing its design on Adolph Weinman's 1916 "Walking Liberty" half dollar. The front features a flag-draped Lady Liberty striding toward the sunrise, carrying branches of laurel and oak symbolizing civil and military glory. On the reverse, a design by John Mercanti features an eagle with a shield, olive branch, and talon and arrows.The coins are made at an armored facility in West Point, N.Y., alongside the military academy. Dealers say they heard the mint had run out of planchets -- round metal disks ready to be struck into coins. The disks are used for various coins, and the companies producing the blanks also are busy, limiting the mint's ability to increase production. The mint won't comment on the planchets.... Coins Divvied UpEach Monday morning now, the mint divides its silver coins into two pools. It divvies up the first equally among authorized purchasers. The second is allocated proportionately, based on the buyer's past purchases. The mint limited purchases once before -- in the late 1990s, when investors loaded up on silver, wrongly anticipating that a failure by the world's computers to adjust to the new millennium would cripple the economy.Jim Hausman, head of the Gold Center in Springfield, Ill., one of eight companies in the U.S. authorized to buy silver eagles, estimates that the rationing will cut his expected annual sales of four million silver eagles in half.And the result, he says, is almost un-American.Increasingly, investors are taking a shine to alternatives. The Royal Canadian Mint saw its sales of silver Canadian maple-leaf bullion coins rise 40% last year, to 3.5 million, according to a spokesman.Some investors expect the craze to end badly. They draw comparisons to what happened to silver in the 1970s. A rich Texas family poured billions of dollars into silver, and prices surged above $50 an ounce in 1980, only to plunge again after government intervention."It's akin to what happened when the Hunt brothers tried to corner the silver market," says Wendell Curry, who owns McAllen Gold & Silver Exchange in McAllen, Texas. "The silver hawks are now trying to corner silver American eagles. And it's making it harder for mom and pop to buy these for their grandchildren."

Oh how the tables have turned for Brazil. Why, back in the 1980s Brazil was defaulting on its debt and Brazil’s currency, the real was the laughing stock of the whole currency market. For currency investors, the real was as speculative as a penny-stock. Roll the hands of time forward to today and it’s a whole new story. Savvy investors like Warren Buffet are holding the Brazilian real. Why in the world would he hold a currency from a country like this? Well it’s no secret that natural resources have been enjoying a bull-market for a while now and according to Jim Rogers we’ve still got a long way to go in this commodity boom.Hate These Sky-High Food Prices? You Wouldn't If You Owned Brazil!Brazil is a commodity rich nation. The largest South American country is also the world's largest producer of iron ore, coffee, and sugar (in fact, while the entire world struggles to pay for US$127 oil, Brazil has managed to cut their energy costs by mass producing sugar-based ethanol). Brazil is also a major exporter of soybeans, pork and beef. So as commodity prices continue to rise all over the world, Brazil is literally cleaning up. Honestly, this is fairly typical. Whenever any shock hits the markets - whether it's a famine, hurricane, war, or market crash - some asset class, company or country always benefits. As my colleague Mike Burnick likes to say: there are profit opportunities found on the flip-side of every crisis! In this case, Brazil is in one of the best places to benefit from these worldwide food shortages, and rising commodity prices.In fact, it's not just food products and iron ore that they export...the Brazilian's just discovered the largest oil field in the Western Hemisphere since the 1970s. So Petrobras, the state owned oil company, is looking pretty good also. Money is flowing into Brazil from literally all over the world. They're not just dependent upon the United States to buy their goods. In fact, China, Asia, and Europe are huge customers of Brazil. That's why the slowdown in the U.S. hasn't even touched Brazil. In fact, their economy expanded 6.6% at the end of last year - while the U.S. slowed to just 0.6%. If that wasn't enough, Brazil just received the coveted "Investment Grade" rating from S&P last month. As a result, a fresh pile of institutional cash is flowing into Brazil right now - and delivering another big boost to Brazilian share prices.One Investment Grade Rating is Great, But Two - Phenomenal!It's rumored that Brazil may receive yet another investment grade rating coming from either Moody's or Fitch in the coming months. If that happens, yet another tidal wave of money will pour into Brazil's stocks, real estate, bonds, etc. Usually when you know money is heading towards a country, you have to cherry pick specific index funds or invest in well-positioned stocks to benefit. But I have a way you can invest in Brazil, even if you have no idea where this investment money is heading: Their currency, the real.Let me explain. In order to buy Brazilian stocks or bonds, you're going to have to buy the currency first. Same thing when buying their real estate - you'll need the real to close on properties. So any way you slice it, Brazil's currency will benefit from its booming economy. Some investors argue the "B" of the BRIC nations is already too overbought. It's not. Yes, the Brazilian real has climbed 22% over the last 12 months - more than any of the other top 16 currencies of the world. But I still think this nation could soar even higher. Here's why: Not only is the second round of money about to hit this country but also Brazil is investing in its future.Making an Investment in Your Own FutureBrazil is already taking steps to ensure they continue prospering. In fact, on May 12th, Brazilian President Lula announced tax cuts for 25 industries. That will stimulate growth. But it gets even better. They are going to give billions of dollars in government loans to help their exports cope even more with the rising currency prices. As of this writing, the Brazilian government has already announced US$12 billion in tax cuts. Plus, they're giving 10 times that amount to finance new machinery and infrastructure over the next three years. Their newly formed Brazilian Sovereign Wealth Fund will also aid Brazilian companies reach overseas and bolster their growth. But wait, it gets even better....Brazilian firms are also investing heavily in consumer electronics, aerospace, bio-fuel, software, and medicines. So Brazil will NOT be a "one hit wonder;" prospering only during the commodity boom years. No they're taking steps now to ensure they will be a viable economy long after the "resource boom" is over. For instance, you'll see over 40 billion reals (US$24.3 million) spent on technology by 2010. Much of this technology is going to rush into these sectors: agribusiness, nanotechnology, biotechnology, biodiesel, perfume, oil, and gas. Brazil's economy could continue to prosper for years to come. This is why a guy like Buffet can comfortably apply his long-term buy and hold strategy in a place like this. He sees how bright Brazil's future is, so he's buying the real. I would recommend you also consider this booming economy when you're building your own diversified currency portfolio.

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